USDC investor shells out $2M to receive $0.05 USDT trying to evade crash
USDC #USDC
Soon after Circle revealed that Silicon Valley Bank did not transfer $3.3 billion of its USD Coin (USDC) reserves, the market responded with a massive sell-off — depegging the stablecoin from the US dollar. However, not all investors were lucky enough to walk away with their funds amid the uncertainty.
To cut losses, investors started selling their USDC tokens in exchange for other stablecoins, such as Tether (USDT) and avoiding impermanent losses. Unfortunately, a member of Crypto Twitter who goes by the name BowTiedPickle highlighted a transaction that shows that a USDC investor paid over $2 million to receive $0.05 of USDT.
On-chain investigations revealed that the user had stored the assets in a liquidity pool (LP) — a popular method to earn cryptocurrencies. The user could have sold his LP tokens for USDT for a 6% slippage. However, they chose to go for a ‘questionable’ method. As explained by BowTiedPickle:
“The unfortunate soul used the KyberSwap aggregation router to dump a large clip of 3CRV (DAI/USDC/USDT) LP token into USDT.”
Given the race against time, the USDC investor forgot to set his slippage, which allows investors to set an exact price of the token for the transaction to go through. He further explained the various nuances that eventually led to an MEV bot netting $2.045 million in profit after paying $45 in gas and $39k in MEV bribes.
Crypto Twitter member BowTiedPickle provides an overview of how USDC investor lost over $2 million. Source: Twitter
The above episode highlights how human error can result in permanent loss of funds. While cashing out USDC for fiat or other cryptocurrencies, Cointelegraph advises investors to recheck the information and methods of transfer.
Related: Breaking: Circle discloses $3.3B tied up at Silicon Valley Bank
Soon after Circle confirmed that $3.3 billion was stuck with Silicon Valley Bank, a resultant sell-off of USDC caused the stablecoin’s value to go below $1.
At the time of writing, USDC lost over 10% of its value as it traded at $0.8774.